8-K: EVI Industries Reports Record Second Quarter Revenue and Gross Profits, Continues Investment in Operations

EVI Industries announces record revenue and gross profits for the second quarter and six-month periods ended December 31, 2024, while continuing to invest in operations and completing acquisitions.

Summary

• EVI Industries reported record revenue of approximately $93 million and $186 million for the three and six-month periods ended December 31, 2024, representing increases of 1% and 4%, respectively.
• Gross profit also reached record levels for both periods, with $28 million for the quarter and $56 million for the six months.
• The company's gross margin hit a record of 30% for the six-month period.
• Net income increased to $4.4 million, or 2.3%, compared to $2.6 million, or 1.5% for the six-month period.
• Adjusted EBITDA increased to a record of $12.7 million, or 6.8%, compared to $11.5 million, or 6.4% for the six-month period.
• The company completed two acquisitions during the six-month period and another on January 31, 2025, expanding its presence in the Southeast and Midwest regions.
• EVI paid a $4.6 million dividend, the largest in the company's history.
• The company's net debt increased from $8.3 million at June 30, 2024, to $24.0 million at December 31, 2024.
• The company has an equipment sales backlog of over $100 million.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to record revenue and gross profit, but tempered by decreased operating income and increased debt. The company's growth strategy and investments in technology are promising, but there are also risks related to economic conditions and competition.

Positives

• Record revenue and gross profit were achieved for the quarter and six-month periods.
• Gross margin reached a record high for the six-month period.
• The company successfully completed two acquisitions, expanding its market presence.
• A special cash dividend was paid to shareholders.
• The company has a strong backlog of confirmed customer sales orders.
• Investments in sales and service teams are expected to yield positive returns in the future.
• Technology initiatives are underway to transform EVI into a modern, data-driven company.

Negatives

• Operating income decreased to $2.4 million compared to $3.0 million for the three-month period.
• Net income decreased to $1.1 million, or 1.2%, compared to $1.3 million, or 1.5% for the three-month period.
• Adjusted EBITDA decreased to $5.1 million, or 5.5%, compared to $5.5 million, or 6.0% for the three-month period.
• The modest increases in revenue during the three and six-month periods is primarily attributed to the irregular cadence of industrial revenue and in part to delays in the completion of certain large industrial sales order contracts.
• Cash provided by operating activities decreased by $8.7 million compared to the same period last year.
• Net debt increased from $8.3 million to $24.0 million.

Risks

• The company's future performance is subject to general economic and business conditions.
• Supply chain delays and disruptions could impact the company's ability to deliver products and services.
• Inflation and rising interest rates could increase costs and impact the market for the company's products and services.
• The company's ability to implement its business and growth strategies is subject to risks and uncertainties.
• The company faces competition in the commercial laundry industry.
• Cybersecurity threats or incidents could disrupt operations and compromise confidential information.
• The company's investments in technology and personnel may not result in the anticipated benefits.

Future Outlook

The company expects to benefit from the completion of confirmed sales order contracts across various laundry categories, contributing to an over $100 million equipment sales backlog, and anticipates positive returns from investments in sales, service, and technology.

Management Comments

• Henry M. Nahmad, EVI's Chairman and CEO, commented: 'We are a long-term focused company with ambitious growth plans.'
• Henry M. Nahmad, EVI's Chairman and CEO, commented: 'The continued confidence in our strategy is derived from early successes combined with financial strength and wherewithal, our reputation as a knowledgeable and high-quality buyer and successful builder of businesses, the expected impact of promising technologies, and a heavily invested leadership team to guide the Company into the future.'
• Henry M. Nahmad, EVI's Chairman and CEO, commented: 'As part of our long-term focus, we are committed to continuous investmentincluding in people, processes, and technologiesaimed at enhancing operational efficiency and driving sustained success.'

Industry Context

EVI Industries operates in the fragmented North American commercial laundry distribution and service industry, where it has established itself as a leader through its long-term growth strategy and acquisitions.

Comparison to Industry Standards

• It's difficult to provide a precise comparison to industry standards without specific competitor data.
• However, EVI's growth strategy of acquiring and integrating smaller distributors is a common approach in fragmented industries.
• Comparable companies might include other regional or national distributors of commercial laundry equipment, such as those focused on specific segments like hospitality or healthcare.
• EVI's focus on technology and service is also in line with industry trends towards providing more comprehensive solutions to customers.

Stakeholder Impact

• Shareholders will benefit from the special cash dividend and potential future growth.
• Employees may see increased opportunities as the company expands its sales and service teams.
• Customers can expect improved service and solutions through the company's technology investments.
• Suppliers will benefit from the company's continued growth and demand for products.
• Creditors may see increased risk due to the company's increased debt.

Next Steps

• The company plans to continue investing in people, processes, and technologies to enhance operational efficiency and drive sustained success.
• The company will continue to pursue acquisitions to expand its market presence.
• The company will continue to develop and deploy its field service technology and e-commerce platform.

Key Dates

Keywords

EVI Industries, commercial laundry, revenue, gross profit, acquisitions, dividend, EBITDA, financial results